Ten New Investment Concepts The Time Has Come

T here's a rumor going            expectations and think that        around that the Mutual          Diversification means getting one  Funds are broken and just       of every product type that's out   can't work anymore, for a             there. In fact, they are basic     multitude of reasons. They've         risk minimization tools that       tried index funds, but these,         every investor needs to use.       too, have been less than                                                 impressive since they hit the         3. Appreciate the power of         street a few years back, and are      income: Base Income just has to    now being enhanced... what does       grow every year, period, for a     that say? Here are some new           person to have any hope of         and/or forgotten ideas that can       keeping up with inflation. That's  get your investment program back      right, growing Market Value is     on track:                             inflationary... particularly with                                        respect to hat size, and income    1. Abandon the popular averages:      paves the road to retirement       Over the past six years, all of       income.                            the major averages are grossly                                           negative or just beginning to get     4. Buy low (within reason), sell   back toward their best past           higher: Profitable company stock   levels. At the same time, the         prices fluctuate just like         NYSE advance/decline line has         unprofitable ones. The difference  been extremely positive.              is that the former are much more   Additionally, the last time the       likely to move back up again. Buy  averages were up, issue breadth       quality at lower prices (just      was totally negative.                 like any other form of shopping),                                        big BUT, set a reasonable (10% or  2. And the basics of investing,       so) profit-taking target... and    again, are what? Most investors       pull the trigger. Re-load, and do  confuse Quality with analyst          it again.                                                                P) where the only valid (Market    5. Embrace The Working Capital        Value) tests of a manager's        Model: For both portfolio Asset       ability. They still are. I have    Allocation and Performance            never found a correlation between  Evaluation, use the cost basis of     the calendar year and any market,  your holdings as opposed to their     interest rate, or economic cycle.  Market Value. This is the only                                           way to use short time periods (a                                         year being the shortest for           8. Corrections are every bit as    anything at all meaningful) for       lovable as rallies: In truth,      any kind of analysis. Also, as a      profit taking is more fun, and     bonus, you'll never make another      much easier decision-making than   fixed income mistake.                 buying stocks while in the throes                                        of a falling Equity Market. But    6. Fall in love with Volatility,      one is just the flip side of the   not with securities of any kind:      other, and you need to learn the   Market volatility is one of the       lyrics to Every Day just as you    few things (if there are any at       knew Peggy Sue.                    all) that you can be certain                                             about. Use it wisely and it will      9. Understand The Investor's       shorten your road to investment       Creed: How did trading get a bad   success. All too often,               rep? What is a stock exchange?     unrealized gains on the loved         Buy and hold just doesn't fit.     ones become realized losses on        The key is timing (not market      the tax return.                       timing) and selectivity. In a                                            rising market you should be        7. Remember Peak-to-Peak and          selling more than buying,          Trough-to-Trough: There was a         resulting in a growing cash        time when tests like these (and       position. This is a good thing.    variations like P to T, or T to       In a falling market you should be  buying more than selling,             and how. Think about this. There   resulting in a smaller cash           is no average, index, or           position... also a good thing. If     benchmark that can be compared to  you run out of cash while the         the Market Value changes of a      market is still falling, you are      properly diversified portfolio.    doing it right. By the same           Nadda.                             token, if you feel stupid having                                         taken your profits and the market     11. Establish Rules and Apply      is still foaming, your brilliance     Discipline... a bonus idea. Just   will not be your only reward.         do it.                                                                                                      10. Investing is not a                From: "The Brainwashing of the     competitive event: It's all about     American Investor: The Book that   you: your money, your risk            Wall Street Does Not Want YOU to   tolerance, your goals, and your       Read"                              objectives. It doesn't matter                                         what the others are doing, why         About the Author: Steve Selengut, sanserve@aol.com, steve@sancoservices.com, 800-245-0494, Professional Investment Portfolio Manager since 1979. BA Business, Gettysburg College; MBA Professional Management, Pace U. Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy" Source: www.isnare.com